Taxicab Industry On The ‘Verge Of Collapse,’ Aldermen Told

By Fran Spielman
Chicago Sun-Times
March 8, 2016

Chicago’s taxicab industry is “on the verge of collapse” because of an “unlevel playing field” further tilted by the decision to let ride-hailing companies like Uber make airport pickups, aldermen were told Tuesday.

The taxi business at Chicago’s airports is down about 30 percent since ride-hailing services were allowed to do pickups at O’Hare and Midway, cabbies say.

At a meeting of the City Council’s License Committee that dragged on for hours, cabdrivers and their union representatives likened Mayor Rahm Emanuel’s plan to appease them by reducing fines and relaxing licensing requirements to “shuffling the deck chairs on the Titanic.”

 What’s needed, they claimed, is not tinkering around the margins but a comprehensive plan that requires ride-sharing drivers who have siphoned business away from taxis to obtain city chauffeurs licenses just like cabdrivers.

That demand is not new. But cabbies came armed with new figures to back it up: 524 surrendered taxicab medallions, up from just five in 2013; 97 foreclosed medallions; and just one medallion transfer since October when the prior average was 45 transfers each year. Maria Guerra Lapacek, business affairs and consumer protection commissioner, speaks to the City Council License Committee.

Since the City Council passed a ride-hailing ordinance, the average gross income of a Chicago cabdriver has been cut in half. Since Emanuel gave away the taxicab industry’s last bastion of exclusivity, cabdrivers say they’ve lost at least 30 percent of their pickups at O’Hare and Midway Airports.

“This is the current reality: Taxi drivers cannot earn a living. They can’t pay their lease. If they try to go to work for Uber, they can’t earn a living because there’s a massive oversupply of drivers,” said Meg Lewis, a researcher for AFSCME Council 31 who works with the union local representing cabdrivers.

 “Taxi companies’ parking lots are full of unleased vehicles. And if these companies can’t lease their vehicles, they’re going to file for bankruptcy. If no action is taken, the taxi system that Chicago relies on is going to collapse. And that’s going to mean the loss of thousands of full-time jobs.”

Mara Georges, the former longtime city corporation counsel now representing the Illinois Transportation Trade Association, agreed with Lewis that Chicago’s once-formidable taxi industry is on the “verge of collapse.”

“Nobody can get a loan to obtain or to finance a medallion or to purchase a new vehicle as required by the city’s ordinance. Currently 70 percent of medallion loans are in default. There is not a bank in the country where you can attempt to get a loan on a Chicago medallion. The banks just won’t lend anymore,” she said.

Last fall, the mayor defended his decision to give cabdrivers a 15 percent fare increase but hand ride-hailing companies the right to make pickups at O’Hare and Midway, McCormick Place and Navy Pier.

Cabdrivers accused the mayor of giving away the store to Uber, the ride-hailing giant whose investors include Hollywood super-agent Ari Emanuel, the mayor’s brother.

They argued that the 15 percent fare hike they spent 10 years demanding was small change compared with the mother lode of airport and convention business they stood to lose.

Emanuel countered that his goal was not to decimate an already-wounded taxicab industry but to strengthen it and, more importantly, to give Chicago consumers the choices they demand.

On Tuesday, the License Committee came down rather firmly on the side of cabdrivers.

Aldermen stalled the mayor’s plan to make only minor changes and signaled their intention to level the playing field in a far more comprehensive way to help save a dying taxicab industry.

“We have a problem in terms of our taxi industry. … We have done something. [But] we haven’t gone far enough,” said License Committee Chairman Emma Mitts (37th).

“If this continues, we’re going to lose an industry that has been a part of our society for ages,” said Ald. Chris Taliaferro (29th).

Ald. Willie Cochran (20th) added, “It reminds me of how we de-regulated mortgages and neighborhoods collapsed. The empty cabs that are sitting in parking lots now and the value on the medallions collapsed. That’s what we’re seeing: a duplicate of de-regulation that didn’t take varying subjects into consideration.”

Ald. John Arena (45th) unleashed his anger at Business Affairs and Consumer Protection Commissioner Maria Guerra Lapacek.

“You continue to come before us with not good information and, I feel, mislead us into what we’re doing here and continue to say we’re fixing this problem,” Arena said.

“The one thing that would fix the problem is to really regulate [ride-hailing]. That’s what the core problem is. I’m not going to support another change at all. I’m going to continue to block this because we’re being lied to. Your department is not doing its job.”

Arena then held up a letter he claims to have written to the commissioner demanding specific information about the decline in the cab business. Guerra Lapacek replied, “I have not seen that.”

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